Competition has been a key requirement for public sector procurement for at least 40 years.
The UK Treasury ‘bible’ in the 1980s, Government Accounting, saw it as an essential means to secure value for money and ensure transparency and demonstrate fair play. Competition is at the heart of the 2014 EU Procurement Directive and the UK procurement legislation enacted in 2015.
The legislation allows public sector organisations to negotiate contracts without normal advertising and tendering “in so far as is strictly necessary, for reasons of extreme emergency, brought about by events unforeseeable by the contracting authority”. However, it doesn’t dispense with the need for competition, except where there are no other suitable suppliers.
The UK government’s letting of huge contracts, including PPE, apparently without any competition, seems inconsistent both with UK law and its Procurement Policy Note 01/20 on the pandemic published on 18 March 2020.
There are many businesses in the UK that have long been importing from China, including one of the NHS’ main suppliers, DHL, which also has some experience of procurement of PPE and manages a supply chain from China to the UK. Including other suitable businesses in the ‘emergency’ negotiations should not have added to the timescale and might have resulted in quicker delivery to the UK, lower costs and greater quality assurance.
The argument that the circumstances were unforeseeable appears untenable. A scrutiny of PPE contracts let by the UK and EU nations indicates that the latter were signing large PPE contracts six weeks ahead of the UK. Most of their contracts were let through normal open non-urgent tendering processes. By the time the UK government had latched onto the urgency, global demand for PPE was outstripping supply and prices went through the roof.
The UK press has expressed concern about the letting of PPE contracts to businesses that appear to have had little or no experience of procuring it, nor of importing from the Chinese market, and apparent links between some suppliers and UK government ministers and officials. Pestfix, which received a £32million contract, apparently without competition, is in the constituency of Nick Gibb, minister of state at the Department for Education. Matt Hancock is a neighbouring MP. He and Gibb would also have known each other well through their former ministerial education roles.
Perception matters. CIPS guidance requires individuals to declare any personal interest that might affect, or be seen by others to affect impartiality in decision making. The global company, 3M, which is a manufacturer of PPE, has a stronger policy. “Employees must avoid situations where their personal interests could inappropriately influence, or appear to influence, their business judgment. Even the perception that personal interests influence business judgment can hurt 3M's reputation and business”.
Lee Kuan Yew, Singapore’s first prime minister, recognised that a nation that has a reputation for high ethical standards in procurement will thrive much more than those that don’t. In the competitive Brexit world, the UK can learn much from Singapore’s outstanding global economic success, achieved despite its lack of natural resources and impoverished base from which it started.
☛ Colin Cram is chief executive at consultancy Marc1.